Mises Wire

Mises Explains What Motivates Human Action

In the preface to Ludwig von Mises’ Theory and History, Murray Rothbard refers to the book as his “fourth and last great work” as well as “the most neglected masterwork of Mises.” In it, Mises elaborates on the philosophy put forth in Human Action, where he details one of the two sciences of human action — praxeology. The other science of human action, Mises tells us, is history, and in Theory and History, he finally gives a systematic exposition of his method of history, which he calls “thymology.”

Fatalism and the Erroneous Theories of History

Thymology was Mises’ answer to the approaches to historical research that were in fashion in the late 1950s when Theory and History was first published. He starts by dismantling the various theories of history – what we may refer to as “deterministic” views of history – that suggest that the course of history was moving along a destined path determined by some outside force.

Mises gives a damning critique of these philosophies of history, which culminated in the Marxian theory of history that was dominating the discipline during Mises’ lifetime. He writes: “Every variety of the philosophy of history must answer two questions. First: What is the final end aimed at and the route by which it is to be reached? Second: By what means are people induced or forced to pursue this course?”

In the religious materialism that developed in the seventeenth century, the answers to these questions were clear. There was a “prime mover” — God — who created the universe much like a man creates a machine, and mankind will necessarily move mechanistically through stages of history: the period of sinful bliss, followed by the wicked suffering, and finally salvation. This was the deterministic outlook on the course of history that established both the concepts of a “prime mover” and what we can refer to as a “stages doctrine,” which is to say that mankind is destined to move inevitably through certain stages of history in a specific order.

During the Enlightenment, many thinkers began to take a more agnostic approach to the course of human history. Instead of Providence, mankind was moved by reason. But in this doctrine, historical progress was inevitable. Reason would be perfected, and human history would progress only in an upward linear direction. Although this approach did not adopt a “stages” approach to history, it retained the deterministic view of human progress: namely, that we will only progress – and never retrogress – intellectually, morally, economically, and so on.

Hegel inserted the idea of consciousness that was naturally implanted into the collective minds of a people. As Mises explains it, the Hegelians believed that “Providence resorted to a cunning device. It implanted in every man’s mind certain impulses the operation of which must necessarily result in the realization of its own plan.” Hegel referred to this natural intuition as Geist. Through the study of logic, man could still obtain real knowledge of the universe, the Hegelians believed, but any cognition of the universe still depended on this Geist.

Karl Marx attempted to synthesize the Hegelian view with the old materialist doctrine, but with modifications that appealed to his outlook. Marx turned Hegel’s view of Geist into the notion of “class consciousness” the directed the actions of the proletarians and the bourgeoisie. He also reinstated a “stages doctrine” of history, but now it proclaimed the destiny of mankind to move through the stages of feudalism, capitalism, and finally socialism. This was Marx’s cognition of the inevitability of progress. Finally, Marx also touted that his philosophy was “scientific,” but Mises argues that this was only because the scientific outlook toward various disciplines was in fashion at the time. In reality, Marx merely replaced previous notions of the “prime mover” with his undefined “material forces of production” that were – inexplicably – responsible for the way that class consciousness directed the actions of people. Historic progress, in Marx’s world, would occur only because of the enlightened few who were mystically endowed with a higher consciousness – one beyond the consciousness of their class – that would allow them to hasten the inevitable progress toward socialism. These enlightened men would be the prophets of the Marxian religion, and – of course – Karl Marx and Friedrich Engels were the first among them.

Mises spends several pages dismantling these theories of history as untenable and fatalistic. The purpose of Marx’s theory of history, Mises argues, was to “silence the critical voices of the economists by pointing out that socialism was the next and final stage of the historical process and therefore a higher and better stage than the preceding stages.” Rather than combat the economists on the grounds of logic and reason, Marx sought to convince people to dismiss their arguments entirely, as they were merely presenting the “bourgeois economics” dictated by their class consciousness. Damningly, Mises points out that this “irresistible trend toward salvation and the establishment of a state of everlasting bliss is an eminently theological idea.”

Mises and the Cliometricians

In addition to the popularity of Marxist interpretations of history that prevailed during Mises’ lifetime, there was also the rising popularity in the mid-twentieth century of statistical analyses of history. This mathematical approach to history is known as “cliometrics,” and the birth of this method is often dated back to 1957 – the same year that Theory and History was published. Mises’ attack on this budding methodology was prescient, but it unfortunately went unheeded for several decades. The Cliometric Society was founded in 1983, and it continues to promote quantitative approaches to history to this day. Although the field of history itself has moved away from the use of cliometric analyses – largely due to the lack of education in quantitative methods rather than the recognition of the logical flaws in this approach – the field of economics has taken it over in the production of economic histories by scholars whose academic training is in mathematical economics.

First, he points out that the statistical approach to history limits the scope of historical questions that can guide the research. Mathematical economic histories, Salerno argues, are confined to questions such as “What was the net contribution of the railroad to the growth of real GNP in the United States?” These quantitative questions neglect any qualitative analyses, such as the question of “what motivated the huge government land grants for railroad rights-of-way or the passage of the Federal Reserve Act.” In other words, per Mises, the quantitative approach to history ignores the motivations of the men involved, which are the ultimate source of any historical phenomena. A comparison of the two approaches can be found in Milton Friedman and Anna Schwartz’s A Monetary History of the United States, 1857-1960, which tried to explain monetary history through a mechanical movement of money aggregates, and the contrasting book by Murray Rothbard, America’s Great Depression. Rothbard’s work was published in the same year, and both works sought to explain the Great Depression of the 1930s, but only America’s Great Depression offers any analysis of the human beings involved and how their ideas and choices played a role in this significant historical episode.

The second and more significant of the failures of mathematical economics that Salerno points out is the “relationship it posits between theory and history.” He argues that “if the theory used to interpret past events can always be invalidated by future events, then it is unclear whether theory is the explanans or the explanand in historical research.” Put in simpler terms, historical positivists are employing circular logic in their approach to history. They are employing economic theory to interpret historical data, but are then using the interpretation of their data to confirm or refute their theory. The theory is sound because the interpretation of the data confirms it to be so, and the interpretation of the data is sound because the theory tells us that it is.

Instead of a deterministic view of history that purports to know what will happen in the future, these economic historians have no means of even gauging what actually happened in the past. Without an a priori basis of economic knowledge derived from the study of human action, all historical interpretations rest precariously on the self-confirming foundation of raw, quantifiable data.

Mises’ Alternative Approach: Thymology

Mises wrote Theory and History to offer a better approach to the study of history – one that might correct the erroneous trends in which the field was moving. Equipped with the foundation of knowledge derived from praxeology, historical analysis could gain an even deeper understanding of specific historical events through what he referred to as “understanding” throughout his magnum opus Human Action.

“Understanding,” in the technical Misesian lexicon, is the means by which we can estimate the uncertain and mutable elements of any given time and region. It begins with the immutable laws of human action and the natural sciences, but it probes further to the circumstantial elements affecting a specific person or people at a specific period of time. Thymology – the method of improving our understanding of these unique circumstances – is already used by everybody, whether they realize it or not. When an entrepreneur is speculating on the future status of the market, he is practicing thymology to gain a better understanding of the unique factors that help him to anticipate the uncertain future. This takes the laws of economics and natural sciences and seeks to add to it the circumstantial knowledge of culture, beliefs, personal motivations, and other factors that are not universally applicable throughout all of history the way natural laws are.

Although thymology is used outside of the discipline of history, Mises posits that historians would be better off abandoning their erroneous approaches and theories and adopting thymology for historical analysis. He begins by establishing the proper subjects of historical analysis. These consist of the particular value judgments made by individuals, the ends they hoped to achieve, the means they employed to achieve their desired ends, and finally the outcome of the actions taken (which may or may not have been what the individuals were hoping to achieve).

To determine these elements of any historical event, the historian has to be aware of the social milieu in which the individuals exist. Ideas, Mises contends, are the ultimate subject of history because historical change is always driven by the ideas of individuals. But although ideas can change and new ideas can be conceived, the historian would be remiss to treat the human subjects of history as if the context of their environment – their culture, their upbringing, their religion, their political structure – had no effect on the shaping of their ideas.

Mises also encourages historians to reject certain ideological fallacies that can lead them to err. The fallacies he addresses are the “natural factors” and the “biological factors” of ideas. The fallacies derived from the notion that “natural factors” are responsible for the birth of ideas is the product of putting too much weight on the importance of the social environment. It is erroneous to ignore the social context of individuals, but it is equally erroneous to assume historical figures are entirely the product of their environment. “To the same physical environment,” Mises writes, “various individuals and groups of individuals respond in a different way.”

The concept that “biological factors” can explain history is based on racist doctrines. Mises rejects this as well. The racial doctrines seek to explain how some societies have progressed at different rates and in different ways than others by attributing certain characteristics to specific races, but Mises points out that this fails to explain “why a man’s ideas differ from those of people of the same race.” Even if the historian believes one culture to be more advanced than another, the individuality rooted in the conception of ideas make it impossible to claim that the different rate of technological or cultural progression between peoples is the product of any inherent differences. The concerns of the historian, Mises reiterates, are strictly confined to “people’s ideas and the ends they were aiming at motivated by these ideas.” The assumption of biological factors in the formation of ideas is a formula for a misunderstanding of historical events.

Finally, thymology employs the concept of “activistic determinism.” The theories of history were employing the notion of “fatalistic determinism” – which philosophers merely refer to as “determinism” without the additional qualifier. Fatalistic determinism assumes, whether tacitly or explicitly, that man has no free will, and therefore the progress of history is determined by some prime mover beyond any control of the humans that put them in motion. Activistic determinism, Mises makes very clear, is fully compatible with the concept of free will. The “deterministic” element of this concept is merely the recognition of the fact that there are immutable laws of nature that govern all historical events. It is not fatalistic determinism that if I drop a penny off of the Empire State Building, it will fall to the ground; this is the immutable law of gravity at work. The activistic element is the free choice of the actor to drop the penny or to not drop the penny, a decision that is not a matter of fate or destiny, but rather a matter of conscious choice.

Thymology thus assumes that (1) there do exist certain universal laws of nature, referring to both the laws of the natural sciences and the laws of human nature determined through praxeology, (2) human beings have some conception of these laws of nature, though this knowledge may be imperfect or even erroneous (3) an individual’s perception of these laws of nature effects the means they employ to achieve their desired ends based on a perception (accurate or not) of causal connections, and (4) man has the free will to act according to both his desired ends and his perception of these natural laws.

How Thymology Illuminates Historical Understanding

Murray Rothbard employed the thymological method in every history he wrote. In doing so, he offered historical interpretations that were always driven by the motivations of the individual actors involved and often came to conclusions that were different from the conventional wisdom.

A prime example of this is seen in his two-volume An Austrian Perspective on the History of Economic Thought. The conventional narrative had treated the progress of economic thought much along the fatalistic notion of progress put forth by the Enlightenment thinkers. That is, economic thought was progressing in an upward linear direction; it was constantly being perfected, and there was no retrogression.

Rothbard offered a different perspective, claiming that the progression of thought zig-zagged. It was not uncommon for a thinker to take economic science astray with erroneous theories. His most famous example of this was his thesis regarding Adam Smith, and the retrogression of thought that followed from his influence. The scholastic scholars, Rothbard believed, had a much better understanding of economic science than the British classical economists who came centuries after them.

He followed the Misesian method of history further in explaining the roots of these fallacies. Rothbard’s interpretation of the popularity of the labor theory of value of Smith and his followers was rooted in the Calvinist doctrine that was prominent in countries such as Britain and Scotland at the time, which taught that labor should be valued for its own sake, rather than for the ends that it was aimed at. The Catholic countries – such as those in France, Italy, and Austria – were less prone to labor value fallacies because Catholicism taught that joy in consumption was valid.

Rothbard’s histories are extensive, and the thymological method is apparent in each of them. The example provided is useful only because it is such a well-known contribution to history that Rothbard provided. It demonstrates all the elements of why Mises believed thymology was the appropriate method of conducting history. It assumed no pre-determination, and even corrected the underlying determinism of the competing histories (the view of upward progress in history is a determinism that historians are often prone to even subconsciously). It sought a better understanding of the history by looking for the ideas that motivated the individuals involved. Perhaps most importantly, Rothbard treated his history of economic thought with the understanding that the specific elements directly pertaining to the subject matter cannot be divorced from the seemingly unrelated elements of different kinds of history. After all, whether or not one agrees with Rothbard’s explanation for the religious basis of the differing value theories, it is impossible to claim that other historians of thought have even considered their religious beliefs a variable worth considering in explaining the evolution of economic ideas. By recognizing the importance of all of the interconnected details, Rothbard has been able to offer a deeper analysis on the historical subjects he wrote about than most – if not all – of the historians before him or since.

The discipline of history has begun to move away from deterministic and mathematical approaches to history, but it has failed to replace them with the strict thymological approach that Mises put forth in 1957. The result has been that more modern histories are often little more than a slew of jumbled factoids that the historian has failed to organize into a coherent narrative, only to ultimately arrive at conclusions that are in no way based on the evidence presented. Historians are abandoning the fallacies of older historical methods, but without a sounder methodology to replace them, they are falling prey to their own value judgments, ideological biases, and sometimes entirely arbitrary interpretations of events. With this in mind, there is no better time for the resurrection of Mises’ most neglected intellectual contribution.